County, towns owe tax money for over­pay­ment

Record Observer - - NEWS -

CEN­TRE­VILLE — The Queen Anne’s County gov­ern­ment owes the state of Mary­land $688,718, as a re­sult of the state over­pay­ing tax money to the county in past years.

A state au­dit caught the error, in­volv­ing mu­nic­i­pal­i­ties through­out the state.

Some towns in Queen Anne’s County also owe tax money to the state while oth­ers were short changed tax money and got re­funds. The town of Cen­tre­ville got back $683,000, which will be put into re­serve for emer­gen­cies, ac­cord­ing to a town of­fi­cial.

A list of the other af­fected towns in Queen Anne’s County: • Church Hill got back $50,168 • Bar­clay got back $5,300 • Queen­stown owes $17,920 • Sudlersville owes $16,145 • Milling­ton got back $8,245 The towns of Tem­pleville and Queen Anne also owe the state tax money that was over dis­trib­uted to them. Fig­ures for those towns weren’t avail­able.

An in­de­pen­dent au­dit com­mis­sioned by Comptroller Peter Fran­chot for tax years 2010 to 2014 iden­ti­fied the dis­crep­an­cies in lo­cal in­come tax rev­enue.

The comptroller of­fice has an­nounced that the mu­nic­i­pal­i­ties don’t have to start pay­ing it back un­til 2024 and then are al­lowed to pay it back over 10 years.

Even when the county pays back the money, it shouldn’t af­fect county ser­vices since it’s paid over a 10-year pe­riod, said Jonathan See­man, di­rec­tor of Bud­get, Fi­nance, and In­for­ma­tion Tech­nol­ogy.

Also, the county’s to­tal an­nual bud­get is $129 mil­lion, which shouldn’t be af­fected by the amount owed, he said.

How­ever, the county will take in less tax money since it’s been ad­justed, but still See­man doesn’t see a big im­pact.

In Cen­tre­ville’s case, the town got back money. Ge­orge “Smokey” Sigler, coun­cil pres­i­dent, said the money will be put into re­serve for emer­gen­cies. There are no plans right now to spend it.

Queen­stown was re­cently no­ti­fied it owes money, but the town com­mis­sion­ers’ lawyer Brynja McDivitt Booth has rec­om­mended the com­mis­sion­ers take no ac­tion. She said the statute of lim­i­ta­tions may have run out, and the state may have other op­tions to cover the amount.

So far, the town com­mis­sion­ers have taken no ac­tion.

None of the other towns have an­nounced if and when they will pay back the money, if owed. The town of Queen Anne hasn’t been no­ti­fied at all about it, said Mayor Randy Esty.

Mar yland Comptroller Peter Fran­chot sup­pos­edly told the towns last month about it.

In a Nov. 16 let­ter to lead­ers of each af­fected ju­ris­dic­tion, Fran­chot wrote that the comptroller’s of­fice be­came aware of some is­sues con­cern­ing a small num­ber of lo­cal in­come tax dis­tri­bu­tions for lo­cal­i­ties in Montgomery County in tax years 2010 to 2014, re­sult­ing from lim­i­ta­tions of the of­fice’s 30-year-old tax sys­tem.

Fran­chot wrote that the mis­takes were “un­in­tended con­se­quences of our tran­si­tion from pa­per to pre­dom­i­nantly elec­tronic fil­ing, and in­ac­cu­rate tax­payer in­for­ma­tion.”

Dis­cov­ery of these is­sues prompted Fran­chot to launch an ini­tial in­ter­nal in­ves­ti­ga­tion, which led to a third-party, in­de­pen­dent statewide au­dit. This re­cently com­pleted au­dit re­vealed that 0.1 per­cent of the to­tal lo­cal in­come tax rev­enue pro­cessed dur­ing that pe­riod had a statewide im­pact.

Ac­cord­ing to the comptroller’s of­fice, an in­de­pen­dent au­dit iden­ti­fied dis­crep­an­cies with $12.7 mil­lion out of the $14.9 bil­lion in lo­cal in­come tax rev­enue it pro­cessed for tax years 2010 through 2014.

Within the five-county Mid-Shore area, 15 towns received checks while 18 will have up to 17 years, be­gin­ning in 2024, to pay back the money, in­ter­est-free, to the state.

Milling­ton, which strad­dles Kent and Queen Anne’s Coun­ties, was the only town that received both too much and too lit­tle money. It has a net re­fund of $8,245 that prob­a­bly will be used for street re­pairs, “or it will be added to the lit­tle pot of street re­pairs,” Town Ad­min­is­tra­tor Jo Man­ning said.

Man­ning, who is also ad­min­is­tra­tor of nearby Sudlersville, copied her emails to the town com­mis­sion­ers that the small town with a pop­u­la­tion of 500 owes $16,145 to the state.

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